Helping others to help themselves with microfinance

Sunday

Feb 20, 2011 at 4:02 AM

By KESANG CHUNGYALPA

Editor's Note: Tuesday evening's Great Decisions speaker is Jessica Jackley, an active leader in small loans -- especially to women -- for small-scale business in developing countries. The meeting takes place in Scheide Music Hall, at the corner of Beall and University Streets on the College of Wooster campus, at 7:30 P. M. Jackley's topic is "The Power of Perspective."

Kesang Chungyalpa, a senior at the College has been writing her senior thesis on the subject of this program. Ms. Chungyalpa's home is in Sikkim in northeast India

Are we human beings inherently good? In the face of adversity and wrongdoings big and small, it can be hard to claim confidently that this is so. Nonetheless, there are countless examples of people taking strides to make a difference, helping others and stories that make me believe that in fact, we are good people.

One story that serves as the quintessential example is that of Dr. Mohammad Yunus, an economist from Bangladesh. Dr. Yunus has had significant influence on modern microfinance, which involves the provision of financial services to poor and low-income individuals who do not have access to formal financial institutions. Over the past decade, microfinance has become a buzzword in development economics and philanthropy.

In essence, microfinance institutions make loans and other financial services available to the poor, who are usually self-employed and are entrepreneurs, the main idea being that they can lift themselves out of poverty. Dr. Yunus founded the Grameen Bank in 1983 in Bangladesh to provide small loans (microcredit) to the poor, particularly women, without requiring collateral and at very favorable terms. In 2006, he won the Nobel Peace Prize for his work, and his microcredit model has been replicated throughout the globe.

With the rapid emergence of microfinance institutions, many studies have found that group-based credit approaches as the Grameen system not only help the impoverished come out of poverty but also promote gender equality and empower women within social units. Unfortunately, in the recent past there has been some controversy regarding some organizations trying to make profits out of this endeavor by changing their status into commercial enterprises. This led to an increase in interest rates and consequently clients defaulting on their loans. In the light of this issue, the voices of the poor and the stories of the countless institutions that are still trying to work conscientiously towards a greater good seems to have been lost.

As part of my senior independent study, I travelled to North India and interviewed women who were participating in self-help groups, a form of group-based microfinance. I also met with women around the same area who were not involved in microfinance and the differences seemed visible. These programs have a real impact at the very bottom level, especially for women, who not only have very easy access to credit but also gain valuable skills. As one woman mentioned, they find a "support system" and are "empowered".

I came across women from different social castes coming together and overlooking their differences in order to help themselves and one another and to solve issues they were facing in their local community. There were stories of them being able to send their children to school, pay for their medicines, buy food, build a house, come together and put out forest fires because of their participation in these groups. They seemed to have more self-confidence and had "learnt how to fight for their rights".

Listening to these stories and seeing the difference that some of these institutions are making reinsured my belief in the good nature of human beings. The speaker on the next Great Decisions lecture, Jessica Jackley, serves as another example of someone wanting to make a difference and having successfully done so. She is the founder and CEO of ProFounder, an effort to help small businesses and entrepreneurs raise funds and grow. She was also the co-founder of Kiva, the world's first online microlending platform, where individuals can lend to entrepreneurs around the world. The lenders can browse profiles and choose who they want to lend to. Once the entrepreneurs have repaid the loans, lenders can choose to re-lend their funds, donate to Kiva or withdraw their funds. The website has facilitated nearly $150 million in loans and this by itself speaks of the giving nature of human beings.

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